Terra crisis causes UST-related DeFi protocols to drop over 80%

Terra-related projects lost more than 80% as the crisis spread. Meanwhile, Maker (DAI) got a boost as traders looked for other decentralized stablecoins.

The knock-on effects of the collapse of Terra (LUNA) and its stablecoin TerraUSD (UST) on May 11 spread across the cryptocurrency market, with projects in any way connected to the DeFi ecosystem taking a price hit.

The forced sell-off of Bitcoin reserves backing some of the UST also sent BTC to $29,000, and analysts feared that DeFi platforms with liquidity pools consisting mostly of UST and LUNA would collapse.

Terra crisis causes UST-related DeFi protocols to drop over 80%

LUNA, ANC, ASTRO and MARS (USDT-denominated) 4-hour chart 

Source: TradingView


Terra-based protocols are affected

The projects with the worst prospects are those based on the Terra protocol, including Anchor Protocol (ANC), Astroport (ASTRO), and Mars Protocol (Mars).

As shown in the chart above, Anchor Protocol (ANC), Astroport (ASTRO) and Mars Protocol (Mars) tokens have plunged by more than 80% since the LUNA price first started correcting on May 4.

These protocols are all DeFi-focused, meaning they are deeply integrated with UST, their primary stablecoin for liquidity pairs, and LUNA, their primary source of value locked in smart contracts.

These agreements are unlikely to bounce back and recover from the decline as long as UST continues to detach from its $1 peg, and LUNA is trading 98% lower than it was seven days ago.


Inter-blockchain communication protocols have also taken a hit

Assets in the Cosmos ecosystem were also hit hard by the UST crash. ATOM and other tokens that use the Inter-Blockchain Communication Protocol (IBC), such as Mirror Protocol (MIR), Osmosis (OSMO), and Kava, pulled back sharply due to their integration with Terra.

Terra crisis causes UST-related DeFi protocols to drop over 80%

ATOM/USDT vs. KAVA/USDT vs. MIR/USDT vs. OSMO/USDT 4-hour chart 

Source: TradingView

The price drops for these assets were not as severe as those hosted on the Terra protocol, but their integration with Terra did not protect them from impact.


Maker benefits from volatility

Maker (MKR) was a bright spot in trading on May 11, with cryptocurrency traders now embracing Dai (DAI) as the “best” decentralized stablecoin option on the market.

On May 11, MKR price surged 124%, from a low of $1,025 to an intraday high of $2,299, before falling back to $1,278.

Terra crisis causes UST-related DeFi protocols to drop over 80%

MKR/USDT 4-hour chart source: TradingView

As the market digests the current correction, and news of the protocol collapse emerges, watch how other stablecoin protocols like Frax Share (FXS), USDD, and mStable (MTA) perform, and whether cryptocurrency traders will trade for a more centralized option. It will be fun to steer clear of these items.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/terra-crisis-causes-ust-related-defi-protocols-to-drop-over-80/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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